- 1 Marks
FA – May 2024 – L1 – SA – Q10 – Financial Statements Preparation
Describes the link between the statement of financial position and the statement of profit or loss.
Question
Which of the following correctly explains the links between the statement of financial position and the statement of profit or loss?
A. The statement of profit or loss shows the financial position of a business at a given point in time, while the statement of financial position shows the profit or loss for a period of time.
B. The statement of financial position affects the statement of profit or loss, by adding to the owner’s capital.
C. The statement of profit or loss affects the statement of financial position, by either adding to or reducing the owner’s capital.
D. The statement of profit or loss affects the statement of financial position, by adding to and reducing the owner’s capital.
E. The statement of financial position affects the statement of profit or loss, by reducing the owner’s capital.
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